Portuguese scandal breeds oddest of M&A activists 22 Jan 2015 The $9 bln sale of Portugal Telecom’s old domestic unit to France’s Altice is at risk. The unlikely foe? The lawyer who runs PT’s own investor meetings. Resistance to the deal is understandable after PT’s history of bad management. But halting the disposal would be self-sabotage.
Monitise woe a disruptive sign for bank disrupters 22 Jan 2015 The UK mobile payments company has guided for flat 2015 revenue and put itself up for sale, citing share price weakness. Visa’s stake sale and the launch of Apple Pay were catalysts. And a shift from a licence model to subscriptions is proving tricky for all software providers.
Spanish soccer scores by signing Chinese tycoon 22 Jan 2015 Wang Jianlin is the first mainland mogul to buy into a top European club, pumping 45 mln euros into Atletico de Madrid. It’s a high-value transfer for the indebted Spanish champions. For teams seeking cash and access to new fans, a Chinese billionaire strengthens the line-up.
Enjoy UK’s economic idyll while it lasts 21 Jan 2015 Britain seems to have reached the sunny uplands. Earnings are rising faster than prices, unemployment is falling and policy rate rises are off the agenda. But persistent disinflation casts a dark shadow. If prices stop rising, wage increases may also disappear.
One share, two votes is a step backwards for Italy 21 Jan 2015 The country’s long-term shareholders could soon enjoy extra voting rights. This may tempt family firms to float and enable more privatisations. Yet Italy’s markets need more dynamism, not less. The days when a few corporate powerbrokers called the shots were meant to be over.
BBVA hedges banking’s demise with bitcoin punt 21 Jan 2015 The Spanish bank’s ventures arm is backing Bitcoin marketplace Coinbase, alongside tech investors and a stock exchange. BBVA has been a pioneer in digital banking, but Bitcoin aims to disintermediate lenders. That suggests BBVA’s outlay is more hedge than long-term investment.
ASML shows benefits of market power 21 Jan 2015 Shares in the $46 bln chip equipment manufacturer hit record highs after full-year results showed soaring demand from memory chipmakers. At 25 times forward earnings, ASML’s valuation would be toppy in most sectors. But, like chip designer ARM, the Dutch firm dominates its market.
Euro zone QE-by-country not as bad as it sounds 20 Jan 2015 The ECB’s bond-buying programme may leave national central banks on the hook for potential defaults. The goal is to soothe German fears on subsidising weaker countries. Sceptics see a fissure in the monetary union. The fears are exaggerated, but perceptions matter.
ECB’s mission possible: surprise markets 20 Jan 2015 Investors are so geared up for 600 billion euros of quantitative easing that its arrival could underwhelm. Yet Mario Draghi has a reputation for bending markets to his wishes. High uncertainty about how bond-buying will work means the ECB boss still has scope to over-deliver.
Climate feels right for certain deals in Davos 20 Jan 2015 The Swiss mountain air is crisp but the M&A market is hot. Fresh off a $3.5 trln year, bankers and CEOs have plenty to discuss at the World Economic Forum annual meeting. It’s less clear the atmosphere is conducive for the important political accords for which Davos is renowned.
Big Oil’s dividends look safe – for now 20 Jan 2015 Leverage is low and costs and capex can be cut, so the likes of Shell and Total don’t need to slash payouts now. But the current oil price drop has a 1986 feel. Then it took five years to regain the previous peak. If the pain lasts that long, payouts will have to be sliced.
Unilever’s high-fat valuation looks vulnerable 20 Jan 2015 Sales at the maker of Dove soap and Lipton tea fell 2.7 pct last year, hit by currency moves. Revenue is likely to be flat in 2015. Unilever’s business can handle a low-growth world: cost cuts boost earnings and lower oil helps. But its shares trade on awkwardly rich multiples.
Goldman deviates back to bad old standard 19 Jan 2015 CFO Harvey Schwartz says the Swiss currency mess was “a 20-plus standard deviation move.” That’s a daft assessment. Predecessor David Viniar was similarly soft-headed in 2007. A bit of rhetorical flourish is fine, but not if execs look as if they don’t understand risk.
Edward Hadas: Reducing inequality – where to start? 19 Jan 2015 Inequality is a global problem trapped in dysfunctional national debates, and the numbers often confuse. It is easier to cut wealth than reduce poverty. But rich and poor countries have options to do both.
Renzi’s bank reforms can solve Monte Paschi mess 19 Jan 2015 Prime Minister Matteo Renzi has pledged to reform the governance of Italy’s mutual banks. That’s long overdue, but reform might also fix the problem of what to do with ailing Monte dei Paschi. It could start a wave of consolidation in Italian banking – and a healthier economy.
Telefonica finds decent fallback for O2 UK 19 Jan 2015 The Spanish telco is reportedly in talks to sell its UK arm to Li Ka-shing’s Hutchison Whampoa for up to 9 bln pounds. Price, structure, timing, antitrust, and existing network deals may all present hurdles. Still, the status quo looked unsustainable after BT pounced on rival EE.
SocGen’s new chair will help solve regulatory maze 19 Jan 2015 Lorenzo Bini Smaghi is to become the new head of the French bank as it splits its CEO and chairman roles. This is no victory for corporate principles - new EU rules forced the change. But picking a former ECB banker as chairman is a shrewd move as regulation grows more complex.
Cheap oil comes with hidden risks for airlines 19 Jan 2015 Falling oil prices cut airlines’ fuel bills and will lift earnings this year. European carriers’ share prices are up, but weaker players will find it easier to stay in business so needed consolidation may slow down. Excess capacity could soon put pressure on ticket prices.
Review: Why banking is flawed and how to fix it 16 Jan 2015 An investment banker and macroeconomist convincingly argue that regulators have little hope of curbing private credit creation in the digital age, because the borders of banking have been hopelessly smudged. Their solution is radical and ingenious. Sadly, it also looks utopian.
Swiss franc shock will shake up Polish banking 16 Jan 2015 Austria’s Raiffeisen has 2.9 bln euros of Swiss franc loans in central Europe’s biggest market. It’s also under pressure in Russia and Ukraine, and relatively undercapitalised. If Raiffeisen retreated, other foreign operators like BNP Paribas and UniCredit could benefit.